TIDMALBA
RNS Number : 1674W
Alba Mineral Resources PLC
07 February 2017
Alba Mineral Resources plc
("Alba" or the "Company")
Upgrade to Portland Oil Resources, Horse Hill Oil Discovery,
PEDL137, Weald Basin, UK
Highlights
-- Xodus calculate Portland sandstone P50 Oil in Place ("OIP")
of 32 million barrels ("MMbbl"), a 53% increase from the 21 MMbbl
previously reported prior to successful 2016 flow testing
-- Gross recoverable Portland 2C Contingent Resources 1.5 MMbbl
-- Base Case Portland initial oil-rate estimated at 350 barrels
of oil per day ("bopd") per well
-- Ultimate recovery could be increased by a further 8-14% of
OIP via early implementation of a water re-injection scheme. If
successful, this could represent a 114%-440% addition to 2C
recoverable resources, equating to an additional 1.7-6.6 MMbbl
gross recoverable, or 0.5-2.1 MMbbl net to the Company
-- Work plans now aimed towards Portland long-term production by end 2018
Alba Mineral Resources plc (AIM: ALBA) announces that a new
Report by Xodus Group Ltd ("Xodus") calculates the Horse Hill
Portland sandstone conventional oil accumulation to contain an OIP
of 32 MMbbl, an increase of 53% from the previously reported 21
MMbbl of May 2015. The upgrade results from the incorporation of
Nutech's revised petrophysics, as reported in July 2016. As
previously stated by the Company, OIP should not be misconstrued as
recoverable Contingent Resources or reserves, which are detailed
below.
Alba holds a 15% shareholding in HHDL, which in turn owns 65% of
PEDL137 and PEDL246. Alba's direct attributable interest in these
Licences is therefore 9.75%.
In March 2016 HHDL reported the final Horse Hill-1 ("HH-1")
Portland test flowed at a stable dry oil rate of 323 bopd,
producing light, sweet, 35 API gravity crude. The Portland was
produced at the rod-pump's maximum achievable rate and thus flow
was constrained by the pump's mechanical capacity. The test data
analyses show no clear indication of depletion.
As a result of further analysis of the Portland flow test data,
plus a review of similar producing fields, Xodus now assess the
gross recoverable Portland 2C Contingent resources at 1.5 MMbbl.
Calculated OIP and resources reflect oil contained in the entire
Portland structure, as penetrated by the HH-1 and Collendean Farm
-1 wells.
The Contingent Resource volumes given are those estimated to be
attributable to primary recovery from the Portland reservoir.
Results utilise a base case of three wells, draining both the Horse
Hill and Collendean Farm fault blocks, each well with an initial
production rate of 350 bopd.
The report also details that, for a shallow but permeable
reservoir such as the Portland, should a water re-injection scheme
be undertaken to provide pressure support in the field's early
productive life, it is reasonable to expect a material increment in
overall oil recovery. The successful implementation of such a
scheme is estimated to lead to the recovery of an additional 8-14%
of OIP, equivalent to a further 1.7-6.6 MMbbl of gross recoverable
oil.
A summary of the Report's results is shown in tables 1 and 2
below.
As previously reported in October 2016, HHDL submitted a
planning application to Surrey County Council for an extensive HH-1
appraisal programme, including long-term production testing and a
new deviated well, HH-2, designed to access the Portland in both
the HH-1 and Collendean Farm-1 proven oil-bearing fault blocks.
Table 1, Portland Sandstone, gross discovered OIP MMbbl:
Horse Hill Discovery Low (P90) Best (P50) High (P10) Mean
---------------------- ---------- ----------- ----------- -----
Portland OIP MMbbl 21.5 32.2 47.4 33.5
---------------------- ---------- ----------- ----------- -----
Table 2, Portland Sandstone, gross and net to Alba Contingent
Resources mbbls:
Horse Hill Portland Sandstone Gross Field - 100% Net to Alba - 9.75%
------------------------------- ----------------------- ------------------------
Resource Category 1C 2C 3C 1C 2C 3C
------------------------------- ----- ------- ------- ------ ------- -------
Recoverable Oil mbbls
(primary recovery only) (1) 592 1,498 3,629 57.7 146.1 353.8
------------------------------- ----- ------- ------- ------ ------- -------
(1) Xodus Report states recovery could likely be improved by a
further 8-14% of OIP via an early water re-injection scheme
HH-1 Oil Discovery, Location and Company Interest
The HH-1 oil discovery well is located within onshore
exploration Licence PEDL137, on the northern side of the Weald
Basin near Gatwick Airport. HHDL owns a 65% interest in PEDL137 (as
well as in PEDL246) and is the licence's operator.
Michael Nott, Alba's CEO, commented:
"We are very encouraged by the report's conclusions,
particularly with respect to the significant further oil recovery
that could be obtained from a simple water re-injection scheme.
Such reservoir schemes have been in oil field engineering use for
well over 100 years and are typical practice in similar reservoirs
in the US, but have not been widely utilised in the Weald
Basin."
"Upon the expected grant of the necessary regulatory consents,
we eagerly await the start of long-term production testing at Horse
Hill, commencing with the Portland. The Horse Hill consortium's aim
is to move towards a declaration of commerciality and stable
long-term production from the Portland and Kimmeridge Limestones by
the end of 2018."
Qualified Person's Statement:
Michael Nott, aged 68, Alba's CEO, has over 45 years relevant
experience in the geological, mining, minerals, waste disposal,
industrial minerals, oil , drilling, mineral planning and quarrying
industries has approved the information in this announcement.
He holds a BSc. degree in Geology from Queen Mary, University of
London, a MSc. Degree in Mineral Production Management from the
Royal School of Mines, Imperial College, University of London, The
Diploma of Imperial College in Mineral Production Management and is
a Chartered Engineer.
He is a Fellow of the Institute of Materials, Minerals and
Mining, a Fellow of the Minerals Engineering Society, a Fellow of
the Institute of Quarrying and an Associate of the Royal School of
Mines Association.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
For further information please contact:
Alba Mineral Resources plc
Michael Nott, CEO
+44 20 3696 4616
Cairn Financial Advisers LLP
James Caithie / Liam Murray
+44 20 7213 0880
Dowgate Capital Stockbrokers Limited
Jason Robertson / Neil Badger
+44 1293 517744
Glossary:
1C denotes the low estimate scenario
of Contingent Resources
------------------- -----------------------------------------------
2C denotes the mid or best estimate
scenario of Contingent Resources
------------------- -----------------------------------------------
3C denotes the high estimate scenario
of Contingent Resources
------------------- -----------------------------------------------
Contingent Contingent Resources are those
Resources quantities of petroleum estimated,
as of a given date, to be potentially
recoverable from known accumulations,
but the applied project(s) are
not yet considered mature enough
for commercial development due
to one or more contingencies. Contingent
Resources are further categorised
in accordance with the level of
certainty associated with the estimates
and may be sub-classified based
on project maturity and/or characterised
by their economic status.
------------------- -----------------------------------------------
degree API a measure of the density of crude
oil, as defined by the American
Petroleum Institute
------------------- -----------------------------------------------
discovery a discovery is a petroleum accumulation
for which one or several exploratory
wells have established through
testing, sampling and/or logging
the existence of a significant
quantity of potentially moveable
hydrocarbons
------------------- -----------------------------------------------
flow test a flow test or well test involves
testing a well by flowing hydrocarbons
to surface, typically through a
test separator. Key measured parameters
are oil and gas flow rates, downhole
pressure and surface pressure.
The overall objective is to identify
the well's capacity to produce
hydrocarbons at a commercial flow
rate
------------------- -----------------------------------------------
limestone a sedimentary rock predominantly
composed of calcite (a crystalline
mineral form of calcium carbonate)
of organic, chemical or detrital
origin. Minor amounts of dolomite,
chert and clay are common in limestones.
Chalk is a form of fine-grained
limestone
------------------- -----------------------------------------------
mean or expected value, is the probability-weighted
average of all possible values
and is a measure of the central
tendency either of a probability
distribution or of the random variable
characterised by that distribution
------------------- -----------------------------------------------
oil in place oil in place or oil in the ground
is the quantity of oil or petroleum
that is estimated to exist originally
in naturally occurring accumulations
before any extraction or production
------------------- -----------------------------------------------
P10 (high a 10% probability that a stated
estimate) volume will be equalled or exceeded
------------------- -----------------------------------------------
P50 (best a 50% probability that a stated
estimate) volume will be equalled or exceeded
------------------- -----------------------------------------------
P90 (low estimate) a 90% probability that a stated
volume will be equalled or exceeded
------------------- -----------------------------------------------
petrophysics the study of physical and chemical
rock properties and their interactions
with fluids utilising electric
logs, physical rock and fluid measurements
------------------- -----------------------------------------------
primary recovery The first stage of hydrocarbon
production, in which natural reservoir
energy, such as gas drive, water
drive or gravity drainage, displaces
hydrocarbons from the reservoir,
into the wellbore and up to surface.
Initially, the reservoir pressure
is considerably higher than the
bottomhole pressure inside the
wellbore. This high natural differential
pressure drives hydrocarbons toward
the well and up to surface. However,
as the reservoir pressure declines
because of production, so does
the differential pressure. To reduce
the bottomhole pressure or increase
the differential pressure to increase
hydrocarbon production, it is necessary
to implement an artificial lift
system, such as a rod pump, an
electrical submersible pump or
a gas-lift installation. Production
using artificial lift is considered
primary recovery. Primary recovery
is also called primary production
------------------- -----------------------------------------------
sandstone a clastic sedimentary rock whose
grains are predominantly sand-sized.
The term is commonly used to imply
consolidated sand or a rock made
of predominantly quartz grains
------------------- -----------------------------------------------
secondary a second stage of hydrocarbon production
recovery during which a fluid such as water
or gas is injected or re-injected
into the reservoir through injection
wells located in rock that has
fluid communication with production
wells. The purpose of secondary
recovery is to maintain reservoir
pressure and to displace hydrocarbons
toward the wellbore. The most common
secondary recovery techniques are
gas injection and water flooding.
Normally, gas is injected into
the gas cap and water is injected
into the production zone to sweep
oil from the reservoir
------------------- -----------------------------------------------
water re-injection a common form of secondary oil
or water flood recovery in which water is injected
or re-injected into the reservoir
formation to maintain reservoir
pressure and to displace oil towards
producing wells
------------------- -----------------------------------------------
About Xodus
Xodus Group Ltd. are an oil and gas focussed energy consultancy
with over 500 employees providing integrated subsurface and surface
solutions to a global client base. Further information can be found
on Xodus' website: www.xodusgroup.com
About Alba
Alba holds a 15 per cent interest in Horse Hill Developments
Limited, the company which has a 65 per cent participating interest
and operatorship of the Horse Hill oil and gas project (licences
PEDL 137 and PEDL 246) in the UK Weald Basin. Alba is also earning
a 5% interest in Production Licence 235, which comprises the
producing onshore Brockham Oil Field.
Alba has earned the right to a 49 per cent interest in the
Amitsoq Graphite Project in Southern Greenland and has agreed to
acquire a further 41 per cent interest in the Project, subject to
Greenlandic regulatory approvals.
In addition, the Company has recently renewed its Limerick base
metal licence in the Republic of Ireland. The Company has applied
for the reissue of a uranium permit in northern Mauritania. The new
Mauritanian permit will be on a reduced area, and is centred on
known uranium-bearing showings.
Alba continues actively to review and discuss numerous other
project opportunities which have value-enhancing potential for the
Company whether by acquisition, farm in or joint venture in a range
of jurisdictions around the world.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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